Business Funding

Government offers business funding for South African SMEs.

Lulalend’s business funding specialists recommend you establish your business goals and funding needs before you approach a government funder. In many cases, you will need to submit a business plan and cash flow analysis with your application.

Depending on your business, you can apply for a full grant, cost-sharing grant, an incentive, or equity funding. Certain sectors are covered by specialist funds, e.g., green, tourism, agri-processing, manufacturing, and technology. Women and young people may also access special funding programmes.

The Department of Trade and Industry, the National Empowerment Fund, National Youth Development Agency, and the Industrial Development Corporation funds businesses.

If you meet the criteria, organisations like the Small Enterprise Development Agency (Seda) and the Small Enterprise Finance Agency (Sefa) will help you access business funding from the government.

There are a number of ways to fund your business. In South Africa, there are hundreds of business funding types. The best option depends on your business vision and your current financial situation.

You can choose to self-fund your business if you have enough capital. Another funding source is family and friends. When you start to look outside your personal network, consider investment from venture capitalists or an angel investor.

Next, you can apply to lenders, like banks and alternative SME lenders, for business funding.

Funding a new business is harder than raising capital for an existing business. This is because many lenders, like banks, will require a trading history and significant turnover amount. Even if you have only just started operating, there are still business funding options available to you.

If you have enough capital, explore how you can self-fund your business. Look into your personal networks and decide whether or not you can raise capital from family and friends. However, for many entrepreneurs in South Africa this type of informal finance is limited.

Consider setting up a crowdfunding campaign. Investment from angel investors and venture capitalists are other funding sources for new businesses. Alternative lenders are growing as more and more younger SMEs turn to fintech for fast, easy business funding.

Entrepreneurs must have funds to start and grow businesses.

You will need working capital to cover the day-to-day running of your business. Common reasons include paying salaries, purchasing equipment and raw materials. Expansion is another reason you will need business funds. For instance, you might need to purchase new equipment or hire new staff to take on a new contract.

There are different ways you can access business funding. Key business funding channels include government, banks, alternative lenders, personal networks, venture capitalists.

However, not all funders are the right fit for SMEs.

Typically, traditional funding institutions are not geared towards small businesses. They usually require collateral, lengthy trading histories, and high turnover.

Apart from bootstrapping your startup with your own funds, you can raise external funds for your startup.

The good news there is a huge amount of investment into South African startups. If your idea is good enough, you will be able to secure funds from international and local investors. Clearly define your business vision before you approach an investor. They will want to know how your company will make them money.

Once your startup has been trading for a year, you’ll be able to approach online lenders, like Lulalend.